Bitcoin is preparing for battle at the beginning of the Democratic transition in the United States and the spread of coronavirus blockages elsewhere.
Bitcoin (BTC) is beginning what will likely be a busy week for the markets as the United States begins its two-month presidential transition.
After Joe Biden was declared the projected winner of the U.S. presidential election over the weekend, Bitcoin Freedom fell but managed to avoid major losses, what’s next?
Cointelegraph takes a look at the factors that will influence BTC’s price action over the next week.
US Election Frenzy Starts to Bite
Attention remains firmly fixed on Washington as the aftermath of a highly controversial election begins to unfold.
Experts have warned that market volatility is almost guaranteed once the outcome occurs. Since this happened over the weekend, the opening of Wall St. on Monday will be a source of interest for market participants.
At the close of this edition, Japan led the way in profits, with its stock market reaching a 29-year high in what the press is calling the „Biden Bounce“.
Binance’s DeFi index falls 60% while Bitcoin eclipses the altcoins
Bitcoin, on the other hand, has stopped at the continuation of last week’s gains and at one point reached $14,400, $1,590 less than its recent peak. Since then, BTC/USD has rebounded considerably, reaching $15,250 at the close of this issue.
Acting President Donald Trump has promised to challenge the vote recount and could cause more problems for Biden, leading to confusion about the policy, which could stir up feelings.
However, analysts often argue that in the long run, Bitcoin and gold as a safe haven will emerge, regardless of which candidate leads the U.S. in the future. The reason, among other things, is inflation.
As Cointelegraph reported, a speech last week by Federal Reserve Chairman Jerome Powell saw demands for greater financial stimulus to enter the U.S. economy, increasing debt and downgrading the dollar.
„Bitcoin is the dominant crypto currency network, designed to house the ideal safe-haven asset and preserve monetary power for long periods of time without loss of power,“ summarized Michael Saylor, CEO of MicroStrategy, in a tweet on Monday.
„That makes #BTC the solution to the problem of every investor’s reserve value. Few understand this.“
Coronavirus Chaos Drowning Europe
Accompanying the consequences of the elections is the continuing confusion over the handling of the Coronavirus by the nation states.
Europe and the US have recently diverged on this issue, with the former succumbing to a wave of new blocking measures that have been met with considerable public rejection.
After showing buoyant recovery statistics for the third quarter, many governments will soon paint another totally less attractive picture of their economies for the fourth quarter, as economic activity plunges for the second time in 2020.
The Fed’s call for more stimulus is „key to buying Bitcoin,“ says Winklevoss
This opens up the possibility of history repeating itself for Bitcoiners. After March’s cross asset drop and first closings, Bitcoin recovered from $3,600 to five figures in less than two months.
While the governments themselves were repeating the controversial responses to the virus, analysts were already predicting a strong year for Bitcoin in 2021. Among them, as Cointelegraph reported, Real Vision CEO Raoul Pal and Gemini Exchange co-founder Tyler Winklevoss predicted a new all-time record for BTC in the first quarter of next year.
Fear and Greed Index hits danger zone
However, in terms of current investor sentiment, warning bells are ringing as Bitcoin remains above $15,000.
According to the Fear and Greed Index, which measures market sentiment using a basket of factors, a correction is more than overdue.
Compiled as a score of 100, the index reached its highest reading since June 2019 on Monday, when Bitcoin reached its annual high of $13,800.
By comparison, two weeks ago, the index was measuring below 60, firmly „neutral“ territory, before the latest price spike raised optimism.
The closer your score gets to 100, the more likely it is that the market will correct itself thanks to a wave of sales, dragging the price down.
Historical Fear and Greed Index Chart.